JPMorgan Chase & Co., the largest U.S. bank, said it will restrict funding for the coal industry over the next four years and cease financing oil and gas development in the Arctic, including parts of Alaska, to help spur a “clean energy transition.”
The New York-based bank with more than $2.7 trillion in assets committed itself to stop providing "lending, capital markets or advisory services to companies deriving the majority of their revenues from the extraction of coal, and by 2024, phasing out remaining credit exposure to such companies," it said in a statement Tuesday.
JPMorgan Chase said it won't provide project financing to develop any new coal-fired power plants, or refinance existing ones, unless they utilize carbon capture technology. And it won't provide project financing “where the proceeds will be used for new oil and gas development in the Arctic,” it said.
Pressure from Democrats
The announcement comes about a month after a group of 15 Democratic senators and independent Sen. Bernie Sanders of Vermont, a candidate for the Democratic presidential nomination, wrote to the CEOs of the nation's biggest banks, including JPMorgan Chase, urging them to stop financing oil and gas drilling and exploration in the Arctic National Wildlife Refuge. Republican lawmakers denounced the Democrats' arguments as uninformed.
Republican Rep. Andy Barr of Kentucky, one of the largest coal-producing states, told CQ Roll Call in an interview that he's concerned by JPMorgan Chase’s action.
“The hard-working people of Kentucky deserve access to capital just like everybody else,” he said. “It is very dangerous to start politicizing the allocation of credit.”
Barr, a member of the House Financial Services Committee, said JPMorgan Chase is being pressured by “radical” environmental groups that are less interested in curbing carbon emissions than in shaming the financial industry.
BlackRock Inc. CEO Larry Fink sent a letter to CEOs last month urging them to address climate change and related risks, and predicted a shift in capital allocation because of climate risks and impacts. BlackRock, which oversees more than $7 trillion as the world's largest asset manager, announced it would increase sustainable investing and exit certain investments related to thermal coal.
Since then, companies including Amazon.com Inc., Microsoft Corp. and Delta Air Lines Inc. have announced plans to address climate change and reduce or offset greenhouse gas emissions.
JPMorgan Chase's action also follows Goldman Sachs, which late last year pledged to "decline any financing transaction that directly supports new upstream Arctic oil exploration or development," including in the Arctic National Wildlife Refuge.
Rainforest Action Network said JP Morgan Chase’s announcement is a “step forward” but falls short of Goldman Sachs’ pledge, which ruled out funding not only for oil and gas development in the Arctic, but declined financing for exploration, too.
"The fact that even the world’s worst fossil fuel banker wants nothing to do with Arctic refuge drilling shows just how toxic an investment it would be,” Sierra Club campaign representative Ben Cushing said of the JPMorgan Chase announcement. "Now that Chase and Goldman Sachs have drawn a line in the sand, all eyes are on Wells Fargo, Citi, Morgan Stanley, and Bank of America," he said.
Laura Weiss contributed to this report.